Today’s unexpected COVID-19 pandemic is nothing to take lightly, but the reality is that the unexpected is here and we need to adjust. Since my background is in financial planning, I’ll leave the healthcare advice to washing your hands, and practicing social distancing. However, when it comes to financial impact, the effect this pandemic does warrant me to share a few thoughts.
I think it was Mark Twain who was asked the question during a rainstorm, “think it will ever stop”? His reply, “always has” and so far, he has been right.
On “Black Tuesday” in 1987, the S&P dropped 20.4%. But by year-end it closed with a gain of 5.8%–an amount that no one would have predicted at the close of the market on “Black Tuesday”.
Y2K, somewhat inexplicably, delivered a definite financial surprise. 2001 and 2002 were terrible double-digit loser years but were followed by five straight years of gain.
2008 saw the S&P down 36.55%! September 11th, 2001 was devastating for so many reasons, including financially. But the market, and the people of the U.S., rebounded. Beginning March 2013 we saw the longest bull market in history, ending with the COVID-19 pandemic.
So what’s next? And when?
Ever hear the expression ‘if I knew then what I know now’? Well I hope this short blurb gave you some insight as to what to expect in future: the unexpected! Things change, including the financial markets. Maybe now is the time to rethink your financial strategy for the near and distant future. Ask yourself if some unexpected event 5, 10, or 15 years from now could cause a financial situation like this again. Can you ride it out? Will you relive this anxiety? Will guaranteed return products provide you with better financial security in the future?
There is an old adage that says, “In time of peace, prepare for war.” The same holds true for financial war.
And if you want to work on social distancing, try garlic. It tastes great and keeps people at a safe distance.